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Yes, even though I will NEVER buy a house because I have opted out of doing so, I always thought that rule in terms of what you can "afford" for a house was always overstated.
I personally think you shouldn't buy a house that's more than 1.5 to 2 times your annual gross income. So if you are pulling $100,000 a year (solo or combined with a wife) then you are looking at a $150,000 - $200,000 house. It allows you to be able to afford the house, save up money for a good cushion period, save up money in case you loose your job, etc.
Some people on here are running very thin because they bought WAY too much house, using the excuse of, "Well, there were no more houses in the area to buy..." I think that's hogwash
Using a multiple of income is really incomplete. Monthly obligations combined with current resources impact the mulplier
$5K/month extra would allow me to quit my fulltime job and go into semi-retirement, work part time for some extra spending money, and still have plenty of time to travel. That would be life changing.
Speaking of this topic, my BF's lousy ass brother WAS making $6000/mo with his office sales job, but quit due to a ridiculous reason...his ex-wife told his workplace that he was dating someone in the office, which was true, but she couldn't prove it, so it was a "she said-he said " thing that he could have easily just denied, which I woiuld have simply denied up to wazzo if I were him...but no, he quit because he was STUPID & didn't appreciate it & his highly narcissistic, smug attitude thought he could get another job matching his salary just like that.
Well, I guess his work eventually found out, so either he had to quit or his GF, but he's the one who made a TON more, but him being the stupid a-hole that he is, quit...now 5 yrs later, he's down to making $9/hr (so he says) being a pest control sprayer & whining that he has to work 14-16 hour days.
Give me $6000/mo, I'll appreciate it & know what to do with it! It makes me furious every time I think about it!!! And here MY BF is making a WHOLE LOT less & busting his ass every day for not nearly the amount his brother made!
Don't you all think this is totally idiotic of his brother?!
Last edited by Forever Blue; 09-20-2015 at 09:35 AM..
I'll take the other side of this. My wife switched law firms and is working literally half as much and took a temporary 28% pay cut ($60K less per year). Not much has changed for us because we just adapted. We still have our 3 wine subscriptions, season tickets to the Hollywood Bowl, Disneyland annual passes, and in fact we are saving more money than when she was making $220K/year. My wife spends less on clothes, makeup, and services. She also cut back on fitness expenses and we make more meals at home. We're still able to max out her 401(k)/Roth 401(k), backdoor Roth IRA, HSA, and my spousal IRA.
We paid a lot in taxes when she was making the extra $60K and didn't qualify for many tax credits and deductions. Now that she's $160K before above the line deductions, we can deduct her student loan interest and the marginal tax rate is much kinder to us. This happened to be one of the best things for us. My wife works from home 2 days a week and she had more time to enjoy. She took up some new exercise routines, baking, spending more time with the dogs, and volunteering in legal aid clinics. Her old firm allowed her to donate 200 hours pro bono per year; her new firm allows her unlimited at her discretion.
Where I live (Chicago), that lifestyle would cost $50K a month. But I assume you grew up a long time ago, as well as in a cheaper area.
This was about 20 years ago. But the last 20 years have seen 2 market crashes, so it isn't that much different today in my area. Maybe $20-25k a month instead of $15k.
The tradeoff b/w time and money is pretty apparent. Clearly she has a better job now, and the extra time for peace of mind and fitness is BIG win. Congratz on your ability to take the cut. I dream of doing it someday.
Quote:
Originally Posted by kwong7
I'll take the other side of this. My wife switched law firms and is working literally half as much and took a temporary 28% pay cut ($60K less per year). Not much has changed for us because we just adapted. We still have our 3 wine subscriptions, season tickets to the Hollywood Bowl, Disneyland annual passes, and in fact we are saving more money than when she was making $220K/year. My wife spends less on clothes, makeup, and services. She also cut back on fitness expenses and we make more meals at home. We're still able to max out her 401(k)/Roth 401(k), backdoor Roth IRA, HSA, and my spousal IRA.
We paid a lot in taxes when she was making the extra $60K and didn't qualify for many tax credits and deductions. Now that she's $160K before above the line deductions, we can deduct her student loan interest and the marginal tax rate is much kinder to us. This happened to be one of the best things for us. My wife works from home 2 days a week and she had more time to enjoy. She took up some new exercise routines, baking, spending more time with the dogs, and volunteering in legal aid clinics. Her old firm allowed her to donate 200 hours pro bono per year; her new firm allows her unlimited at her discretion.
I apologize for being unclear.
I did not mean that you could not have a maid if you made $240,000 a year. What I mean is that the idea that you would stop looking for bargains, clipping coupons, or suddenly start living the high life is not really true at all.
We make more than that and still budget, consider each purchase, look for sales, recycle/reuse/repair what we can, etc.
And maybe you and I have different definitions of mansion, but no one around here could have one on $240k salary. Not without being so far out in the boonies that you're practically out of civilization. Or some off-chance foreclosure.
I disagree. If you're making $240K/year you don't have to worry about clipping coupons or frugal shopping. I am a frugal person and I would regardless but you don't HAVE to if you don't want to. Also, I understand what you mean about mansions. I meant mansion as in a 6 bedroom house or so, not like one of the 12 bedroom Beverly Hills types of mansions but I see your point and I agree with you there. Nobody can afford a real mansion on that kind of salary in most of the country. That is my bad for not being clear.
Looking back on some of my old threads I found this one... 5 years old already, wow.
Since posting this back in 2015 our monthly income has increased by a solid $3,000. My income took a hit, but my wife received multiple raises, we have a cashflow positive investment property, I have a solid side hustle, and we've paid off some debt.
Being 100% honest our lifestyle hasn't changed all that much. We're still more or less frugal, but I will say I sleep MUCH better.
I think that has been the biggest change. The increase in income has helped us build a large nest egg and pay off debt that just makes us feel less guilty about spending $ and takes away a ton of the financial worry.
One of those billion dollar lotteries would be life changing, but other than that, I like my life the way it is and more spending isn't going to make it any better.
I voted nothing as in I am very happy with my lifestyle. Would I take extra free money? He!! yes. Gimme..gimme
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